Winning Strategies Group
Insurance and Risk Management
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ANNUITIES
What is an Annuity?
In its simplest form, annuities are savings accounts issued by insurance companies that help you to grow or protect retirement income. They can also provide income to you either immediately or at some point in the future. Annuity interest typically grows tax-deferred while you account is accumulating. Income annuities may also have tax advantages depending on how it is established.
43%
the number of households that cite guaranteed monthly income amounts as the number one reason to buy an annuity
75%
of Americans expect that they will have to work due to financial worries in their retirement
40%
of American workers aren’t saving anything for their retirement
12X
your current income; is the minimum amount you need to have saved for retirement to maintain a similar lifestyle and not have to make significant cut backs
There are different types of annuities to meet different goals. Goals are usually accumulation or income needs. Many provide guarantees on principal invested and interest earned. Some even allow you to invest a selection of mutual funds
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Annuities give you the opportunity to name the beneficiaries to receive the proceeds at your death. They can help you avoid probate issues and pass quickly to your beneficiaries
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They often provide a better interest rate that bank savings accounts with the added benefit of tax-deferral on interest earnings
Investing Outside The Box
Most of us picture retirement as a time to relax, travel, engage in our hobbies and simply enjoy life. But even a life of leisure isn't very enjoyable if you still have to worry about money. Many people worry that they will outlive their money.
We all know that markets are volatile. Stocks and other instruments that carry the possibility of great reward also carry the potential for significant loss. Other investments — such as bank-based savings accounts, certificates of deposit and bonds — come with greater apparent security, but generally provide mediocre returns.
At a time when more of us are living longer lives — and the pensions provided by employers, if any, carry no defined benefit — there are a lot of questions on the table. Because of this, annuities have come back into favor in recent years. Different annuity products can be used as a part of different strategies. Most often, they are intended to provide a guaranteed income stream or fund a future life event.
That is the question. What dollars will you access first? Here are some common choices:
Objective (income or growth)
Premium amount
Monthly payout structure (fixed or variable)
Monthly payout period
Degree of principal protection
Liquidity